Govt Launches New Legislation For Late Payment By Public Bodies
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New legislation brought into effect on February 25th means late payment by public bodies should be reduced, and invoices that go beyond their agreed payment terms will become a matter of public record.

The rules, brought in as part of a broader update of public procurement, extend the existing commitment to 30-day payment terms and prompt settlement of accounts.

Under the changes made on February 25th, everyone working in a government supply chain – from the government itself, to suppliers and sub-contractors – must adhere to 30-day payment terms.

Each year, public bodies must also publish a late payment report, to provide greater transparency about the number of their invoices that were not paid on time.

The legislation also affects other aspects of public procurement, for example the abolition of complex paperwork in the bidding process for low-value contracts.

And procurement in general for public sector contracts will be quicker, according to the government.

Piers Linney, a member of the government’s SME panel, said: “We know government business has been incredibly complicated and costly to bid for in the past, and that was reflected in the tiny proportion of spend going to SMEs.”

“This new legislation … creates a huge opportunity for SME businesses with reduced cash flow risk.”

Meanwhile, companies that deal with public bodies elsewhere in Europe will soon be subject to the same protection, as it is being brought in as part of EU-wide legislation.

The UK is the first member state to implement the new rules, having taken just ten months to enshrine them into law – some 14 months faster than the two-year deadline that was permitted.

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